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Rosamond Nina Lehmann was born in Bourne End, Buckinghamshire, as the second daughter of Rudolph Lehmann and his wife Alice Davis, a New Englander. Her father Rudolph Chambers Lehmann was a liberal MP, and editor of the Daily News. John Lehmann (1907-1989) was her brother; one of her two sisters was the famous actress Beatrix Lehmann.

In 1919 she went to Girton College, University of Cambridge to read English Literature, an unusual thing for a woman to do at that time. In December 1923 she married Leslie Runciman (later 2nd Viscount Runciman of Doxford) (1900-1989), and the couple went to live in Newcastle upon Tyne. It was an unhappy marriage, and they separated in 1927 and were divorced later that year.

In 1927, Lehmann published her first novel, Dusty Answer, to great critical and popular acclaim. The novel's heroine, Judith, is attracted to both men and women, and interacts with fairly openly gay and lesbian characters during her years at Cambridge. The novel was a succès de scandale. Though none of her later novels were as successful as her first, Lehmann went on to publish six more novels, a play (No More Music, 1939), a collection of short stories (The Gypsy's Baby & Other Stories, 1946), a spiritual autobiography (The Swan in the Evening, 1967), and a photographic memoir of her friends (Rosamond Lehmann's Album, 1985), many of whom were famous Bloomsbury figures such as Leonard and Virginia Woolf, Carrington, and Lytton Strachey. She also translated two French novels into English: Jacques Lemarchand's Genevieve (1948) and Jean Cocteau's Children of the Game (1955). Her novels include A Note in Music (1930), Invitation to the Waltz (1932), The Weather in the Streets (1936), The Ballad and the Source (1944), The Echoing Grove (1953), and A Sea-Grape Tree (1976).

In 1928, Lehmann married Wogan Philipps, an artist. They had two children, a son Hugo (1929-1999) and a daughter Sarah or Sally (1934-1958), but the marriage quickly fell apart during the late Thirties with her Communist husband leaving to take part in the Spanish Civil War. During World War II she helped edit and contributed to New Writing, a periodical edited by her brother. She had an affair with Goronwy Rees and then a "very public affair" for nine years (1941-1950) with the married Cecil Day-Lewis, who eventually left her for his second wife.

Her 1953 novel The Echoing Grove was made into the 2002 film Heart of Me, with Helena Bonham Carter as the main character, Dinah. Her book The Ballad and the Source depicts an unhappy marriage from the point of view of a child, and has been compared to Henry James' What Maisie Knew.

The Swan in the Evening (1967) is an autobiography which Lehmann described as her "last testament". In it, she intimately describes the emotions she felt at the birth of her daughter Sally, and also when Sally died abruptly of poliomyelitis at the age of 23 (or 24) in 1958 while in Jakarta. She never recovered from Sally's death. Lehmann claimed to have had some psychic experiences, documented in Moments of Truth.

Lehmann was awarded the CBE in 1982 and died at Clareville Grove, London on 12 March 1990, aged 89.